NEW DELHI :
India’s fuel demand dropped in September amidst the domestic economy battling a severe demand slowdown.
According to data from the Petroleum Planning and Analysis Cell (PPAC), the consumption of petroleum products last month fell to 16.01 million tonnes (mt) from 16.06 mt in September last year. The fall was primarily on account of transportation fuel such as diesel and the bitumen used in road construction.
While diesel demand fell by 3.2% to 5.8 mt in September, bitumen demand fell by 7.29% to 343,000 tonnes.
Asia’s third-largest economy grew at its slowest pace in six years in the June quarter at 5%. The International Monetary fund (IMF) on Tuesday slashed its economic growth forecast for India to 6.1% for the current fiscal from its July projection of 7%, citing weaker than expected outlook for domestic demand. IMF also lowered India's FY21 GDP growth forecast by 20 bps to 7.2%.
On Monday, India Ratings and Research revised its roads sector outlook to stable-to-negative from stable, while ICRA warned that traffic growth would turn negative in the second half of this fiscal, dragging down toll revenues with it.
According to ICRA; the economic slowdown, which has reduced commercial vehicle traffic on India’s highways, and the negative impact from the revision in axle-load norms (which allows commercial vehicles to carry higher freight by 15-20% with the same fleet size) has resulted in weak traffic performance across toll road stretches, resulting in lower toll revenues.
However, there was a rise in domestic cooking gas and petrol consumption which grew by 5.97% and 6.27% to 2.18 mt and 2.37 mt respectively last month as compared to the corresponding period last year.
This comes in the backdrop of 14 September drone attacks on Saudi Arabian Oil Company or Saudi Aramco’s facilities that caused the biggest ever-disruption in global crude oil supplies. India spent $111.9 billion on crude oil imports of 207.3 million tonnes in 2018-19.
India’s demand for domestic cooking gas has increased due to the National Democratic Alliance (NDA) government’ marque scheme—Pradhan Mantri Ujjwala Yojana (PMUY), which provides free cooking gas connections to poor families and met its target of reaching 80 million poor families last month, seven months ahead of schedule.
The cost of the Indian basket of crude, which averaged $47.56 and $56.43 per barrel in FY17 and FY18, respectively, was $59.35 in August 2019, according to data from the PPAC. The average price was $59.74 a barrel on 15 October. The Indian basket represents the average of Oman, Dubai and Brent crude.
Rising trade tensions have unsettled the slowing world economy. The World Bank on Sunday slashed its economic growth forecast for India to 6%, citing a broad-based and severe cyclical slowdown. Last week, Moody’s Investors Service lowered its 2019-20 growth forecast for India to 5.8% from 6.2% earlier, saying the economy was experiencing a pronounced slowdown partly due to long-lasting factors.